This Announcement contains inside information as
defined in Article 7 of the Market Abuse Regulation No. 596/2014
(“MAR”). Upon the publication of this Announcement, this inside
information is now considered to be in the public domain.
TransGlobe Energy Corporation (AIM & TSX: “TGL” & NASDAQ:
“TGA”) (“TransGlobe” or the “Company”) announces an interim fourth
quarter update.
All dollar values are expressed in US
dollars unless otherwise stated.
UPDATES
- Increasing Q4 production: October ~14.6 MBoepd, November
~14.8 MBoepd and December (to date) ~16.3 MBoepd compared with
average production during Q3 2018 of 14.3 MBoepd.
- NWG 38A-7 expected water injector found additional oil column,
currently producing 360 Bopd from Red Bed.
- Accelerated two 2019 wells into 2018 program:
- Drilling M-10 twin well targeting Asl A pool as a potential
producer or injector;
- Preparing wellsite for NWG 38A-8 potential Red Bed injector or
oil well.
- Submitted declaration of commercial oil well discovery for SGZ
– 6X discovery, to begin development discussions with the Egyptian
General Petroleum Company (“EGPC”).
- Equipping the 2018 Cardium Hz wells (five one-mile and one
two-mile) for production, following frac stimulation and flow
cleanup. With improved light oil differentials, the Company
is targeting production by year end.
PRODUCTION
Production Summary:
(MBoepd) |
Q3 2018 |
October |
November |
December to Date |
Egypt |
12.1 |
12.3 |
12.8 |
13.9 |
Canada |
2.4 |
2.3 |
2.0 |
2.4 |
Total |
14.3 |
14.6 |
14.8 |
16.3 |
Corporate production increased during the fourth
quarter due to drilling and well optimization results in Egypt
which were partially offset by reduced production in Canada during
November associated with unscheduled compression maintenance and
curtailments due to low pricing. With the dramatic
improvement in Canadian light oil differentials, it is expected
that the six new Cardium horizontals will be placed on production
by year end.
SALES/HEDGING
During the quarter, the Company sold 450 Mbbls
of entitlement crude oil for $27 million, inclusive of realized
hedging losses of ~$3.9 million.
Also during the quarter, the Company repurchased
the ceilings on half the 2019 hedge position and increased the
entire 2020 hedge ceiling to $70 from $62.35/bbl for an aggregate
cost of ~$3.9 million.
OPERATIONS UPDATE
ARAB REPUBLIC OF EGYPT
Western Desert
Based on the previously announced well test
results from SGZ-6X, the Company filed a declaration with EGPC of a
Commercial Discovery to initiate early development discussions with
EGPC which could result in initial production by
mid-2019.
In South Alamein (“SA”), the Company resubmitted
a request for military access to drill the SA 24X Jurassic
exploration prospect and entered into extension discussions with
EGPC.
Eastern Desert
In West Bakr (“WB”), the two M field infill
wells (M-North and M-South) continue to exceed internal pre-drill
estimates producing at rates of ~800 Bopd per well. During
November the Company received early approval to drill a replacement
well for the M-10 well which was originally drilled in 2000.
The M-10 well was abandoned due to well bore mechanical
issues encountered during a water shut off remedial program in
September 2018. The replacement well (M-10 twin) is targeting the
main M pool Asl A sand and was originally planned for 2019.
It has subsequently advanced into the current drilling schedule and
commenced drilling in early December. The M-10 twin is
anticipated to produce oil although it is structurally lower in the
pool. If the well encounters water it will be converted
to a water injection well to provide pressure support for the M
pool.
In North West Gharib (“NWG”), the NWG 38A-7 was
completed (unstimulated) in the main Red Bed formation and
confirmed the presence of oil. NWG 38A-7 was placed on
production in late November and is currently producing 360
Bopd. The NWG 38A-7 well has extended the known oil column
height structurally down an additional 101 feet to a total of 445
feet for the NWG 38 pool, which should increase the reserves
assigned to the NWG 38 pool in 2018. Based on the results of NWG
38A-7, the Company has commenced wellsite construction at NWG
38A-8, located approximately 0.4 km south of NWG 38A-7 which is
targeting the Red Bed pool to potentially provide water
injection/reservoir pressure support for the 38A pool. NWG
38A-8 is scheduled for drilling following the M-10 twin well.
CANADA
In Canada, the Company completed the 2018
Cardium development program, which included six gross (five net)
horizontal Cardium development wells drilled from a common pad to
improve efficiencies and reduce costs. The Company drilled and
completed five one-mile horizontal wells and the Company’s first
two-mile horizontal well. The wells were fracture stimulated
during November and December and are being equipped to produce by
year end. In addition, the Company completed construction of
a new oil gathering pipeline during the quarter to connect the new
multi-well pad and two existing producers to the Company’s main oil
processing facility to reduce trucking in the community and
associated operating expenses.
About TransGlobe
TransGlobe Energy Corporation is a cash flow
focused oil and gas exploration and development company whose
current activities are concentrated in the Arab Republic of Egypt
and Canada. TransGlobe’s common shares trade on the Toronto Stock
Exchange and the AIM market of the London Stock Exchange under the
symbol TGL and on the NASDAQ Exchange under the symbol TGA.
Advisory on Forward-Looking Information
and Statements
Certain statements included in this news release
constitute forward-looking statements or forward-looking
information under applicable securities legislation. Such
forward-looking statements or information are provided for the
purpose of providing information about management's current
expectations and plans relating to the future. Readers are
cautioned that reliance on such information may not be appropriate
for other purposes. Forward-looking statements or information
typically contain statements with words such as "anticipate",
"believe", "expect", "plan", "intend", "estimate", "may", "will",
"would" or similar words suggesting future outcomes or statements
regarding an outlook. In particular, forward-looking information
and statements contained in this document include, but are not
limited to, the Company's strategy to grow its annual cash flow;
expectations regarding its acquisition efforts; anticipated
drilling, completion and testing plans, including, the anticipated
timing thereof, prospects being targeted by the Company, and rig
mobilization plans; expected future production from certain of the
Company's drilling locations; TransGlobe's plans to drill
additional wells, including the types of wells, anticipated number
of locations and the timing of drilling thereof; the timing of rig
movement and mobilization and drilling activity; the Company's
plans to file development lease applications for certain of its
discoveries, including the expected timing of filing of such
applications and the expected timing of receipt of regulatory
approvals; anticipated production and ultimate recoveries from
wells; to negotiate future military access (including the expected
timing thereof), including the anticipated timing of wells on
production; TransGlobe's plans to continue exploration, development
and completion programs in respect of various discoveries; future
requirements necessary to determine well performance and estimated
recoveries; and other matters.
Forward-looking statements or information are
based on a number of factors and assumptions which have been used
to develop such statements and information but which may prove to
be incorrect. Although the Company believes that the expectations
reflected in such forward-looking statements or information are
reasonable, undue reliance should not be placed on forward-looking
statements because the Company can give no assurance that such
expectations will prove to be correct. Many factors could cause
TransGlobe's actual results to differ materially from those
expressed or implied in any forward-looking statements made by, or
on behalf of, TransGlobe.
In addition to other factors and assumptions
which may be identified in this news release, assumptions have been
made regarding, among other things, anticipated production volumes;
the timing of drilling wells and mobilizing drilling rigs; the
number of wells to be drilled; the Company's ability to obtain
qualified staff and equipment in a timely and cost-efficient
manner; the regulatory framework governing royalties, taxes and
environmental matters in the jurisdictions in which the Company
conducts and will conduct its business; future capital expenditures
to be made by the Company; future sources of funding for the
Company's capital programs; geological and engineering estimates in
respect of the Company's reserves and resources; the geography of
the areas in which the Company is conducting exploration and
development activities; current commodity prices and royalty
regimes; availability of skilled labour; future exchange rates; the
price of oil; the impact of increasing competition; conditions in
general economic and financial markets; availability of drilling
and related equipment; effects of regulation by governmental
agencies; future operating costs; uninterrupted access to areas of
TransGlobe's operations and infrastructure; recoverability of
reserves and future production rates; that TransGlobe will have
sufficient cash flow, debt or equity sources or other financial
resources required to fund its capital and operating expenditures
and requirements as needed; that TransGlobe's conduct and results
of operations will be consistent with its expectations; that
TransGlobe will have the ability to develop its properties in the
manner currently contemplated; current or, where applicable,
proposed industry conditions, laws and regulations will continue in
effect or as anticipated as described herein; that the estimates of
TransGlobe's reserves and resource volumes and the assumptions
related thereto (including commodity prices and development costs)
are accurate in all material respects; and other matters.
Forward-looking statements or information are
based on current expectations, estimates and projections that
involve a number of risks and uncertainties which could cause
actual results to differ materially from those anticipated by the
Company and described in the forward-looking statements or
information. These risks and uncertainties which may cause actual
results to differ materially from the forward-looking statements or
information include, among other things, operating and/or drilling
costs are higher than anticipated; unforeseen changes in the rate
of production from TransGlobe's oil and gas properties; changes in
price of crude oil and natural gas; adverse technical factors
associated with exploration, development, production or
transportation of TransGlobe's crude oil reserves; changes or
disruptions in the political or fiscal regimes in TransGlobe's
areas of activity; changes in tax, energy or other laws or
regulations; changes in significant capital expenditures; delays or
disruptions in production due to shortages of skilled manpower
equipment or materials; economic fluctuations; competition; lack of
availability of qualified personnel; the results of exploration and
development drilling and related activities; obtaining required
approvals of regulatory authorities; volatility in market prices
for oil; fluctuations in foreign exchange or interest rates;
environmental risks; ability to access sufficient capital from
internal and external sources; failure to negotiate the terms of
contracts with counterparties; failure of counterparties to perform
under the terms of their contracts; and other factors beyond the
Company's control. Readers are cautioned that the foregoing list of
factors is not exhaustive. Please consult TransGlobe’s public
filings at www.sedar.com and www.sec.goedgar.shtml for further,
more detailed information concerning these matters, including
additional risks related to TransGlobe's business.
The forward-looking statements or information
contained in this news release are made as of the date hereof and
the Company undertakes no obligation to update publicly or revise
any forward-looking statements or information, whether as a result
of new information, future events or otherwise unless required by
applicable securities laws. The forward-looking statements or
information contained in this news release are expressly qualified
by this cautionary statement.
Oil and Gas Advisories
Mr. Brett Norris, M.Sc., P Geo, - Vice President
Exploration for TransGlobe Energy Corporation, and a qualified
person as defined in the Guidance Note for Mining, Oil and Gas
Companies, June 2009, of the London Stock Exchange, has reviewed
and approved the technical information contained in this
announcement. Mr. Norris obtained a Master’s of Science Degree in
Geology from the University of Western Ontario. He is a
Registered Professional Geoscientist in the province of Alberta and
has over 30 years’ experience in oil and gas.
BOEs may be misleading, particularly if used in
isolation. A BOE conversion ratio of six thousand cubic feet of
natural gas to one barrel of oil equivalent (6 mcf: 1 bbl) is based
on an energy equivalency conversion method primarily applicable at
the burner tip and does not represent a value equivalency at the
wellhead. Given that the value ratio based on the current price of
crude oil as compared to natural gas is significantly different
from the energy equivalency of 6:1, utilizing a conversion on a 6:1
basis may be misleading as an indication of value.
References in this press release to production
test rates, are useful in confirming the presence of hydrocarbons,
however such rates are not determinative of the rates at which such
wells will commence production and decline thereafter and are not
indicative of long term performance or of ultimate recovery. While
encouraging, readers are cautioned not to place reliance on such
rates in calculating the aggregate production for TransGlobe. A
pressure transient analysis or well-test interpretation has not
been carried out in respect of all wells. Accordingly, the Company
cautions that the production test results should be considered to
be preliminary.
Certain type curve information included to in
this news release, including IP30, represents estimates of the
production decline and ultimate volumes expected to be recovered
from wells over the life of the well. This information is based on
management-generated type curves based on a combination of
historical performance of older wells and management's expectation
of what might be achieved from future wells. The information
represents what management thinks an average well will achieve.
Individual wells may be higher or lower but over a larger number of
wells management expects the average to come out to the type curve.
Over time type curves can and will change based on achieving more
production history on older wells or more recent completion
information on newer wells.
The following abbreviations used in this press
release have the meanings set forth below:
Bopd |
barrels of oil per
day |
MBopd |
thousand barrels of oil
per day |
Boepd |
barrels of oil
equivalent per day |
MBoepd |
thousand barrels of oil
equivalent per day |
MBbl |
thousand barrels |
For further information,
please contact: |
|
|
|
Investor
Relations |
Via
FTI Consulting |
Telephone: 403.264.9888 |
|
Email: investor.relations@trans-globe.com |
|
Web site:
http://www.trans-globe.com |
|
|
|
TransGlobe Energy |
www.trans-globe.com |
Ross
Clarkson, Chief Executive Officer |
|
Randy
Neely, President |
|
Eddie
Ok, Chief Financial Officer |
|
|
|
Canaccord Genuity (Nomad & Joint
Broker) |
+44
(0) 20 7523 8000 |
Henry
Fitzgerald-O'Connor |
|
James
Asensio |
|
|
|
GMP First Energy (Joint Broker) |
+44(0)207 448 0200 |
Jonathan Wright |
|
|
|
FTI Consulting (Financial PR) |
+44
(0) 203 727 1000 |
Ben
Brewerton |
|
Genevieve Ryan |
transglobeenergy@fticonsulting.com |
|
|
PDF
available: http://resource.globenewswire.com/Resource/Download/a4fe2b02-b666-4eb4-9020-abb63f33f75f
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